Sustainability Measurement GIN

1999 Greening of Industry Network Conference Best Practice Proceedings
MEASURING PROGRESS TOWARDS SUSTAINABILITY PRINCIPLES, PROCESS, AND BEST PRACTICES
Joseph Fiksel Jeff McDaniel Catherine Mendenhall
Battelle Memorial Institute Life Cycle Management Group 505 King Avenue Columbus, Ohio 43201-2693 (614) 424-5730 fiksel@battelle.org
1999 Greening of Industry Network Conference Best Practice Proceedings ABSTRACT A number of leading companies in the U.S., Europe and Japan have made a commitment to become sustainable enterprises, and have launched proactive programs to improve the environmental and social performance of their products, processes, services, and facilities. However, one of the key challenges faced by these companies is how to track their progress towards sustainability and communicate it to both employees and other important stakeholders. This paper is intended to assist business decision-makers who wish to initiate continuous measurement and improvement of their triple bottom line, i.e., the economic, environmental, and societal performance of their products, facilities, and enterprise. First, a set of guiding principles is presented, suggesting that performance measurement should: 1) focus on both resource and value indicators, 2) explicitly represent the triple bottom line, 3) consider the full product life cycle, and 4) combine both leading and lagging indicators. Next, a comprehensive performance measurement process is described, including specific steps for planning, implementation, and review, based upon established practices within the business community. Finally, examples are given of five well-known companies that are recognized leaders in the field of sustainability measurement. The intent of this paper is to provide both a conceptual understanding of the state of the art, and a survey of best practices across several industries, thus creating a pragmatic foundation for establishing a customized sustainability measurement process within any company. The paper is based upon Battelles experience in developing and implementing performance measurement processes for a variety of industrial clients, including several leaders in the sustainability movement. In particular, the performance measurement process is based on the results of a multi-year program sponsored by the Electric Power Research Institute (EPRI).
INTRODUCTION
As the new millennium dawns, many leading companies in the U.S., Europe and Japan are responding to the challenges of global population growth and environmental pressures by adopting a commitment to sustainability (Hart, 1996). Business leaders speak of sustainable development, sustainable growth, sustainable products, sustainable processes, and sustainable technologies. Many have launched proactive programs that include life cycle accounting, design for eco-efficiency, community outreach, clean technology development, and a variety of other initiatives. In 1999, a group of U.S. companies including DuPont and General Motors collaborated in supporting a high-visibility National Town Meeting on Sustainability. Their motivations are not purely altruistic recent research has demonstrated that pursuit of sustainability can not only result in environmental improvements and societal benefits, but can also increase economic value for the firm (Kiernan and Martin, 1998; Dixon, 1999). Yet few, if any, companies can respond definitively to the question, Which of our products, processes, services, and facilities are sustainable? Answering this question requires the ability to measure sustainability in a quantitative, or at least qualitative fashion. However, measuring sustainability differs from measuring other dimensions of business performance in several important respects. First, this practice is relatively new, so that there is a lack of commonly accepted or mandated measurement standards. Second, sustainability is complex and multi-faceted, covering a broad spectrum of topics from habitat conservation, to energy consumption, to stakeholder satisfaction and financial results. Finally, measurement of sustainability extends beyond the boundaries of a single company and typically addresses the performance of both upstream suppliers and downstream customers in the value chain. While many firms are beginning to address this challenge, so far the main focus has been on the choice of appropriate performance indicators. For practitioners of performance measurement, there are many additional issues that need to be addressed , including the timing, data requirements, accountability assignments, communication, and pragmatic utilization of these indicators. We argue that sustainability performance measurement (SPM) must be approached as a systematic business process in order to be integrated effectively into company strategic planning and day-to-day operations. This paper sets forth some fundamental principles for SPM, and describes a three-phase process for planning, implementing, and reviewing an SPM process. The focus is on the initial planning phase, which begins with articulation a sustainability policy and concludes with establishment of specific performance targets. The paper illustrates the application of the SPM principles and process by drawing upon industry best practices. Some important lessons can be learned from the companies that have already begun their journey towards sustainability, and are already measuring and reporting on their performance. A review of publicly available data shows that The Body Shop, BP Amoco, Collins & Aikman Floorcovering, Monsanto, and Volvo are applying these principles and following most of the SPM process steps. Analysis of their policies, objectives, performance indicators, and targets provides a number of insights about how the above-mentioned challenges can be addressed. It is our hope that the approach and best practices presented here will help other companies to develop and improve their SPM practices, enabling a more rapid and widespread transition towards sustainable products and processes. We believe that the pressures of population growth, economic development, and resource scarcity will eventually compel all companies to address sustainability issues. Moreover, we argue that achievement of worldwide sustainable development will require the emergence of companies that routinely seek competitive advantage through simultaneous measurement and improvement of environmental, economic and social performance.
SUSTAINABILITY MEASUREMENT PRINCIPLES

Four fundamental principles can help companies address the challenges associated with measuring and reporting sustainability. These are: 1. 2. 3. 4. Address the dual perspectives of resource consumption and value creation. Include economic, environmental, and societal aspects. Systematically consider each stage in the product life cycle. Develop both leading and lagging indicators.
RESOURCE AND VALUE

The first principle of sustainability measurement is that evaluations should address the dual perspectives of resource consumption and value creation.
A sustainable organization should strive to minimize resource consumption while maximizing value creation. Here, resources are defined broadly to be natural or anthropogenic stocks that are required for the creation, use and disposition of a product or service. Examples of resources include materials, energy, labor, and land. Value is defined as a condition, attributable to a companys activities, which benefits one or more of the organizations stakeholders (Fiksel et al, 1998). Examples of value creation include increased profitability, reduced pollution, improved nutrition, and liberation of time. Figure 1 lists general categories of performance associated with resource consumption and value creation these provide a foundation for any company to select appropriate performance indicators.
Resource
Energy Material Water Land Waste Cost Human capital Investment capital
Value
Functional performance Information content Customer satisfaction Environmental quality Economic value added Business competency Human health Social welfare
Figure 1. Resource Consumption versus Value Creation
TRIPLE BOTTOM LINE

The second principle of sustainability measurement is that evaluations should include economic, environmental, and societal aspects.
Effective sustainability measurement should consider the complete triple bottom line of economic, environmental, and societal performance (Bennett and James, 1999). These aspects need to be integrated and balanced in order to obtain a comprehensive understanding of product or service sustainability from the perspective of different stakeholders. For example, an automobile consumes economic resources in terms of operation and maintenance costs, environmental resources in terms of fossil fuel, and societal resources in terms of personal time spent driving. It also creates economic and social value, although it may detract from environmental quality. Today, most performance measurement frameworks focus exclusively on economic or environmental performance, and very few address societal concerns (James, 1997). However, based on the recent resurgence of attention to social responsibility, we anticipate an increased focus over the next decade on measuring the societal impacts of products and services.
LIFE CYCLE CONSIDERATION

The third principle of sustainability measurement is that evaluations should systematically consider each stage in the product life cycle.
Resource consumption and value creation take place throughout the life cycle, including the supply, manufacturing, use, and disposition of a product. Historically, companies have focused almost exclusively on their internal operations and have not considered the implications associated with activities of their suppliers or customers. Yet an evaluation that focuses exclusively on one life cycle stage (e.g., manufacturing) may fail to capture significant product benefits or impacts that occur in either upstream or downstream stages (Fiksel, 1996). Referring again to the automobile example, designers have recently begun to consider the end-of-life stage, and the potential impacts of disassembly, recycling, recovery, refurbishment and re-use. In applying life cycle thinking, it is important to consider not only the physical life cycle of the product, from cradle to grave, but also the life cycles of relevant facilities and capital equipment both inside and outside the enterprise.
LEADING AND LAGGING INDICATORS

The fourth principle of sustainability measurement is that evaluations should combine both leading and lagging indicators of performance.
Lagging indicators (also referred to as outcome indicators) are measures of the results or outcomes (e.g., reduction in material intensity) that are attributable to improvements in a companys business processes. Most companies use lagging indicators to report results, and they are preferred by the general public and regulators because they are meaningful and easy to understand. However, lagging indicators represent a retrospective view of performance, and do not provide managers with foresight about future performance expectations. A more proactive approach, increasingly common among innovative firms, is to augment lagging indicators with leading indicators (also referred to as business process indicators), which measure internal practices or efforts that are expected to improve future performance (e.g., use of life cycle design tools which help improve material efficiency). In other words, these indicators help managers monitor their progress toward achieving their sustainability objectives.
SUSTAINABILITY PERFORMANCE MEASUREMENT (SPM) PROCESS

Public discussion about measuring sustainability thus far has focused on what should be measured. For industrial practitioners, this question is not sufficient, since it addresses only one component of a performance measurement process. Other important issues include how frequently to measure, who should be accountable for measurement, and how the results are to be utilized. In other words, sustainability performance measurement should be viewed as an ongoing business process, i.e., a set of logically related tasks or activities undertaken to achieve a defined business outcome. By understanding the entire performance measurement process, practitioners can identify and use the indicators and metrics that are most appropriate for their business.
SPM PROCESS OVERVIEW

A variety of performance measurement processes have evolved in industry practice. These processes generally consist of a series of steps that can be grouped into three phases: Plan, Implement, and Review (Baker, 1999). Companies have applied these steps to track a broad range of activities, including environmental management, facility operations, and technology development programs. Based upon recent work sponsored by the Electric Power Research Institute (EPRI), Battelle has codified generally accepted industry practices into the process model shown in Figure 2. The process involves a three-phase structure of Plan, Implement and Review, which is analogous to the ISO 14031 framework for Environmental Performance Evaluation. While the general model is universal, the actual sequencing and implementation of these steps will vary from company to company due to their differing business strategies, environmental impacts, and organizational structures.
Implement Phase
9. Improve Performance 8. Track & Report Performance 7. Integrate with Business Processes 6. Obtain Support
Continuous Improvement
10.Gather Feedback
11. Review Planning Steps
Review Phase
5. Determine Targets
1. Develop Sustainability Policy
2. Identify Major Aspects
3. Establish Objectives
4. Select Indicators & Metrics
Plan Phase
Figure 2. Sustainability Performance Measurement Process

The starting point for the performance measurement process is the Plan phase, during which practitioners create a framework that addresses the companys most significant concerns. The company must develop a sustainability policy, identify major performance aspects, establish objectives, select specific indicators and metrics, and commit to achieving specific targets. Prior to initiating this phase, the practitioners must

determine the scope of measurement, which can be as narrow as a specific product, or as broad as the entire enterprise. The Plan phase steps are Step 1. Develop Sustainability Policy. If it does not already exist, the company must articulate a sustainability policy. This statement generally provides the basis for a strategic transformation of the business from a linear model of development to a more holistic, cyclical model. Step 2. Identify Major Aspects. The second step answers the question, What aspects of our performance are most important? The aspects of sustainability are often expressed in terms of the categories illustrated in Figure 1. Step 3. Establish Objectives. For a subset of the aspects identified in Step 2, the company must establish improvement objectives. It is advisable to select a small number of key aspects that provide the basis for sustainability objectives. Step 4. Select Indicators & Metrics. The most challenging step is selecting sustainability indicators that correspond to the stated objectives. To select appropriate performance indicators, a company must assess how each of the major activities within the scope of measurement (e.g., Product use by customers) contributes to the selected aspects (e.g., Energy consumption). Quantitative or qualitative metrics must be associated with each selected indicator. Step 5. Determine Targets. To complete the Plan phase, managers must agree on specific performance targets that will represent milestones for short and long-term sustainability improvements. Once a performance indicator framework has been fully designed, the actual process of measuring, tracking and reporting performance begins. To assure an effective measurement framework, it is important to understanding the challenges that will likely be encountered during the Implement phase. For instance, many indicators that might be valuable for decisions-making cannot be tracked easily, e.g., the quantity of greenhouse gases emitted during the life cycle of a product system could be valuable information, but quantifying this indicator may be a burdensome exercise. Similarly, quantitatively assessing the contribution of a product to a consumers health or well-being might be technically infeasible, although qualitatively assessing the relative value of one design option versus another may be a viable approach. The steps in the Implement phase are obtaining support, integrating with other business processes, tracking and reporting, and initiating improvement efforts. Step 6. Obtain Support. Following the development and demonstration of the measurement framework, the support of line managers must be obtained for successful implementation. Step 7. Integrate with Business Processes. The tools and procedures associated with sustainability measurement need to be integrated with existing systems and processes. Step 8. Track & Report Performance. The accountable organizations track their progress toward the specified targets, and report results to senior management and external stakeholders. Step 9. Improve Performance. Based on the results of performance measurement, organizational teams focus on product, process, or operational changes that will improve performance. The third and final phase involves reviewing and enhancing the performance measurement process. The Review phase is especially important for efforts to measure sustainability because the field of knowledge is changing rapidly. As a point of comparison, financial reporting standards have been evolving for a few hundred years, but serious efforts to track and report sustainability are only a few years old (Fiksel et al, 1998). Instead of trying to create an ideal framework initially, practitioners should focus on making meaningful progress with a limited set of indicators, recognizing that the process will inevitably evolve.

Step 10. Gather Feedback. Soliciting organizational feedback on the measurement process itself will often reveal drawbacks or gaps in the existing framework. Step 11. Review Planning Steps. The company should periodically review and refine the selected aspects, indicators, metrics, and targets of value. Since most companies are just beginning to address the challenge of measuring sustainability, this paper focuses on the Plan phase. The intent is to help practitioners develop a framework of indicators, metrics, and targets that will prove most helpful to their company. Therefore, the next section describes the five steps of the Plan phase in more detail.
STEP 1: DEVELOP SUSTAINABILITY POLICY

The first step in the Plan phase is developing a sustainability policy, which articulates the companys overall aims and principles of action with respect to its economic, environmental, and societal performance. The goal is to create a policy that both supports the business strategy and addresses the concerns of company stakeholders. The activities of a company affect multiple stakeholders in different ways. For example, community groups might be concerned about air emissions or other releases from manufacturing plants, while employees have interests ranging from safety to the companys image and stewardship activities. Insurers and lenders may be concerned about environmental costs and potential liabilities, while nongovernmental organizations and interest groups are concerned with issues such as labor conditions, greenhouse gas releases and the use of renewable energy sources. Finally, shareholders and investors are interested in new technology investments, and how sustainability influences creation of economic value for the firm. Although stakeholders are important, the company retains a great deal of discretion regarding the emphasis of its sustainability initiatives. The companys overall business strategy should influence how the sustainability policy and the remainder of the SPM process are designed. For example, a company that has developed a strong brand identity might consider focusing on environmental and social issues that could damage their image. As examples, Nike and Levi-Strauss revamped their product responsibility efforts after receiving negative media coverage related to the activities of major suppliers. This assessment of the business strategy answers questions such as q How does the company define success? q What are its specific short and long-term business goals? q How can environmental and societal concerns support or hinder efforts to achieve these goals? q How could SPM results help the company achieve its strategic, tactical, and operational goals? Synthesizing an understanding of stakeholders concerns with these business strategy issues enables the creation of an effective sustainability policy.
STEP 2: IDENTIFY MAJOR ASPECTS

During the second step, companies evaluate how their products, services, and activities can support (or hinder) progress towards sustainability. This step ensures that the performance measurement process addresses important economic, environmental, and societal concerns. As illustrated in Table 1, the list of potential sustainability aspects for products is quite extensive (Fiksel et al, 1998). In addition, there are a variety of sustainability aspects that are not associated with specific products or processes, but rather

pertain to overall company practices. Examples of such company-wide aspects include management systems implementation (e.g., ISO 14001), auditing programs, and community development.
Table 1. Aspects of Product Sustainability

Economic Direct Raw material cost Labor cost Capital cost Potentially Hidden Recycling revenue Product disposition cost Contingent Employee injury cost Customer warranty cost Relationship Loss of goodwill due to customer concerns Business interruption due to stakeholder interventions Externalities Ecosystem productivity loss Resource depletion Environmental Material Consumption Product & packaging mass Useful product lifetime Hazardous materials used Energy Consumption Life cycle energy Power use during operation Local Impacts Product recyclability Impact upon local streams Regional Impacts Smog creation Acid rain precursors Biodiversity reduction Global Impacts CO2 emissions Ozone depletion Societal Quality of Life Breadth of product availability Knowledge enhancement Employee satisfaction Peace of Mind Perceived risk Complaints Illness & Disease Reduction Illnesses avoided Mortality reduction Accident & Injury Reduction Lost time injuries Reportable releases Number of incidents Health & Wellness Nutritional value provided Food costs
Companies have applied a variety of approaches to perform review and select the aspects that are most important for performance tracking. One recommended approach involves a sequence of three tasks: 1. Identify all aspects of sustainability that are potentially important 2. Assess or estimate the magnitude of these aspects using available indicators 3. Rank the aspects in terms of relative importance. Completing the first task requires activities such as conducting brainstorming sessions, reviewing previous successes and problems, and interviewing stakeholder organizations. Assessing the magnitude of the sustainability aspects identified requires either quantifying them in terms of resource or value metrics, or at least qualitatively rating them on a semantic scale. Finally, the organization is left to determine the most significant environmental aspects by assessing their relative importance, which can be accomplished through various group voting techniques. Having determined which aspects are most significant, decision-makers can then proceed to select the few that merit performance tracking.
STEP 3: ESTABLISH OBJECTIVES

Based upon the companys sustainability policy and the determination of significant environmental aspects, a set of annual and/or longer-term objectives is established. Objectives arise from the sustainability policy and are quantifiable where practical. Examples include:

q q q q q q q
Eliminating usage of toxic materials Increasing material utilization ratios Improving the ecosystem quality on managed properties Reducing the costs of waste management activities Developing inherently clean and safe technologies Increasing employee satisfaction and well-being Supporting reduction of poverty in developing countries
As shown by these examples, objectives should address the triple bottom line, and should be oriented towards either resource conservation or value creation.
STEP 4: SELECT INDICATORS AND METRICS

Once managers have agreed upon the critical objectives, they can proceed to select the performance indicators and accompanying metrics for their sustainability program. The indicators and metrics help to make the sustainability policy actionable by providing specific guidance to managers and decisionmakers. They also help to demonstrate a tangible commitment to external stakeholders.
Performance indicators
A sustainability performance indicator (SPI) is defined as a quantifiable attribute of an enterprises activities that characterizes the potential contributions of these activities toward the enterprises sustainability objectives. Examples of SPIs include air emissions, stakeholder satisfaction ratings, contributions for conserving habitat, and revenues associated with clean technology applications. Note that it is important to have a balanced set of both leading and lagging indicators; neither are sufficient on their own. Examples of lagging and leading sustainability indicators are shown in Figure 3.
Leading examples
No. of eco-efficiency audits No. of process re-designs % of employees receiving sustainability training
Lagging examples
Mass throughput reduction CO2 emission reduction Stakeholder satisfaction
Business process indicators Needed to motivate behavioral changes
feedback
effects
Sustainability outcome indicators Needed to provide evidence of results
Figure 3. Leading and Lagging Sustainability Indicators

Several criteria can help managers choose the most appropriate set of performance indicators. The following selection guidelines have proven useful in a variety of industries.
1. Comprehensive. Does the set of performance indicators address all of the organizations major aspects and objectives? 2. Controllable. Can the organization, group, manager or employee significantly influence the desired results? 3. Cost-Effective. Can the necessary data be obtained from existing sources or otherwise easily collected? 4. Manageable. Is the set of indicators limited to the minimal number required to meet the other criteria? 5. Meaningful. Will individuals throughout the organization and external stakeholders easily understand the indicators? 6. Robust. Do the indicators address inputs and processes (leading indicators) and outcomes (lagging indicators)? 7. Timely. Can measurement occur with sufficient frequency to enable timely, informed decision-making?
These guidelines support successful implementation by avoiding commonly experienced problems. For example, if managers are held accountable for indicators that they cannot significantly influence, resentment or apathy can easily result. Similarly, some personnel evaluation programs have faltered because an unwieldy number of indicators made the program overly complex.
Performance Metrics
A performance metric defines a specific means of measuring and tracking a performance indicator. In general, a variety of metrics can be chosen for any given performance indicator. For instance, potential metrics for solid waste include annual volume (tons/year), annual improvement (% reduction), or quantity avoided (tons recycled/year). Metrics can be classified in several different ways. For example, qualitative metrics are those that rely on semantic ratings based on observation and judgement, while quantitative metrics are those that rely on empirical data. A second important distinction is between absolute and relative metrics. Absolute metrics are defined with respect to a fixed measurement scale, e.g., total annual hazardous waste generated. Relative metrics are those that are defined with respect to another metric or variable, e.g., total hazardous waste per unit of energy produced. Another approach is to use time-based relative metrics, i.e., those which compute the change in a particular quantitative metric over a given time period; for example, the percent reduction of total hazardous waste from 1992 to 1993." Finally, several companies are striving to use normalized metrics, which measure sustainability performance per unit of production. Normalization enables comparability over time, but can also introduce anomalies. For example, a well-performing company might wish to acquire a high-volume business with relatively poor sustainability performance, which would skew the companys overall performance results. Similarly, a manufacturing company that reduced a major waste stream from its facility by outsourcing the production to a supplier should not receive credit for that reduction (assuming that the supplier continued to generate the waste stream.)
10
STEP 5: DETERMINE TARGETS

After the indicators and metrics have been identified, the company is ready to commit to short or long term targets, which establish what level of performance it intends to achieve. In brief, indicators designate a measurable dimension of performance, metrics provide a means of quantifying the indicators, and targets provide a basis for tracking and assessing improvement. Companies sometimes choose not to set targets until they have established a baseline performance level against which progress can be measured. A thorough understanding of current capabilities minimizes the risk of over-commitment. However, establishing targets cannot be delayed indefinitely because these targets guide decision-making efforts and support stakeholder communication. Managers can evaluate their options relative to these targets, and stakeholders can better assess a companys performance based upon their ability to achieve stated targets. The challenge faced by operating managers at a mid-size U.S. electric utility demonstrates the necessity of explicit targets. The company had committed to reduce the number of air opacity exceedances; however, the company had not set a target level of performance. Without this guidance, the managers took incremental steps to marginally improve compliance but did not significantly alter their established practices because they did not know whether further changes were warranted. Thus, improvement efforts can flounder unless explicit targets are established.
REMAINING STEPS
The fifth step concludes the Plan phase. Afterwards, companies begin using the set of objectives, indicators, and targets to report and improve their performance. As described at the beginning of this section, these steps can be organized into an implementation phase and a continuous improvement phase.
BEST PRACTICE COMPANIES

A review of recognized sustainability leaders shows that at least a few companies are applying the SPM principles and process steps. Since only a small number of companies have publicly stated a sustainability policy, other companies will find the experiences of these leading companies valuable as they progress on the path towards sustainability. The authors chose five companies for this evaluation: BP Amoco, Collins & Aikman Floorcoverings, Monsanto, The Body Shop, and Volvo. Each of these companies represents a different industry, and has demonstrated some innovative approaches to sustainability measurement. The analysis revealed that these companies are generally applying both the principles and the process steps to report their sustainability performance. However, some gaps were also uncovered in each program. One important caveat is that this study was based exclusively on publicly available data, e.g., the companies annual reports and web sites. Since externally published measures nearly always focus on corporate level performance, this analysis is limited to company-wide performance indicators.
COMPANY PROFILES
A summary of each companys sustainability measurement program is provided in the Appendix, however brief profiles of the programs are provided below. The Body Shop has expressed its pro-active environmental stance since they began business in 1976. The Body Shops aim is to become a sustainable business, and its widely publicized Environmental Values report in 1995 was the first of its kind. The report, consisting of three independently verified
11

statements on the company's environmental, animal protection, and social/stakeholder performance, was recognized by an award from UNEP (the United Nations Environmental Programme). BP Amoco is committed making a positive contribution to society. They take environmental precautions and support community development for areas in which they operate. BP Amoco believes that there is not a trade-off between financial performance and standards of care, but rather believes that the two areas are mutually reinforcing. Environmental issues considered by BP Amoco include climate change, air quality, and renewable energy technologies. Collins and Aikman Floorcoverings has demonstrated that environmental sustainability can also yield advantages in cost-effectiveness. They are the only carpet manufacturer in the world reclaiming old carpet and recycling it into new, high-performance carpet. Collins and Aikman understands the importance of addressing the triple bottom line, and has instituted several programs to improve performance. They have also formed a sustainability laboratory comprised of outside experts. Monsanto has embraced sustainable development as part of its core strategy, and a few years ago spun off its chemical manufacturing operations to focus on life science-based businesses. To create value for stakeholders, Monsanto is designing products that use fewer raw materials, produce less waste, require less energy, and enable users to be more productive. Moreover, the company hopes to use its product development expertise to create new markets for sustainable products in agriculture and nutrition. Volvo is currently working towards becoming a world leader in the transportation equipment industry, based on its performance in the areas of safety, environmental care, and quality.1 The company intends to gain competitive advantage and contribute to sustainable development through environmental programs that are characterized by a holistic view, continuous improvement, technical development, and resource efficiencies.
APPLYING THE PRINCIPLES

The authors first evaluated whether and how the best practice companies had applied the four sustainability performance measurement principles. As summarized below, each of the evaluated companies is following these guidelines but their approaches vary. 1. 2. 3. 4. Address the dual perspectives of resource consumption and value creation. Include economic, environmental, and societal aspects. Systematically consider each stage in the product life cycle. Combine leading and lagging performance indicators
RESOURCE AND VALUE

All of the companies reviewed in this paper track and report how their operations consume resources and generate value for stakeholders. However, some companies have developed particularly effective or innovative methods of tracking resource and value, as shown in Table 2. By focusing on both resource conservation and value creation, the reviewed companies are able to demonstrate how the sustainability initiative supports their overall company goals, such as profit growth, employee opportunity, and
The Ford Motor Company recently acquired the automotive division of Volvo. This analysis is based upon Volvos activities prior to the acquisition.
12

customer satisfaction. In contrast, the environmental reports of most organization focus mainly on the resource side, and more specifically, tend to only report reductions in environmental burdens.
Table 2: Noteworthy Approaches to Measuring Resource and Value

Financial Indicator Resource Monsanto uses Total Cost Accounting to track environmental expenditures. Environmental Indicator BP Amoco records the total amount of discharges to water, broken down by production process. Volvo tracks how managers incorporate life cycle assessment tools into major product development programs. Societal Indicator Collins and Aikman measures employee satisfaction by tracking survey results, retention rate, and internal promotion rate. The Body Shop reports societal indicators including the results of Ethical Auditing, ISEA principles, Social Auditing, and Customer, Employee, and Stakeholder Satisfaction surveys
Value
Monsanto demonstrated increased eco-efficiency of one manufacturing improvement, which saved $6 million in raw materials usage, decreased waste handling, and increased manufacturing capacity.
THE TRIPLE BOTTOM LINE

All of the reviewed companies utilize the triple bottom line to some extent, as shown in Figure 4.
100%
90%
80%
70%
Indicator Composition
60%
50%
40%
30%
20%
10%
0% The Body Shop BP Amoco Collins and Aikman Monsanto Volvo
Company
Financial
Environmental
Societal
Figure 4. Use of Financial, Environmental, and Societal Indicators
13

However, Figure 4 also reveals important differences and similarities among the types of indicators publicly reported by these companies. All of the companies emphasize environmental performance, as environmental indicators comprise half or more of the total indicators reported. The Body Shop emphasizes societal indicators more than the other companies. The practice of measuring societal performance has reemerged during the past couple years and many companies are grappling with how to measure this dimension of performance (Zadek et al, 1997). Financial indicators receive relatively little attention. In some ways, the lack of focus on economic performance is understandable because these companies are public corporations and therefore produce a separate annual financial report with in-depth accounting results. However, this lack of financial indicators is indicative of the fact that many companies do not adequately convey the costs and benefits of their environmental and sustainability programs. These programs can increase revenues, lower operating costs, and improve asset utilization, but relatively few companies have developed the capabilities to effectively track and report those benefits.
LIFE CYCLE CONSIDERATION

As with the other principles, all of the companies have considered the impacts of their products or processes at life cycle stages other than the manufacturing stage. The tools and methods used by the best practice companies range from traditional life cycle analyses (LCA) to simpler, more qualitative approaches. By considering upstream and downstream activities, these companies are able to leverage their design, production, and logistics capabilities to improve the overall impacts associated with their products, services, and operations.
Table 3. Approaches to Life Cycle Consideration

Company The Body Shop Life Cycle Perspective Description Has established LCA scheme that consists of six sections: origins of feedstocks, methods of extraction and/or cultivation, processing, resource consumption, waste generation, and distribution. One effort analyzed the companys forecasting and planning processes to reduce the waste due to obsolete and excess inventory. Has environmental programs to reduce habitat loss from upstream development activities. Since the implementation of these programs, habitat loss has decreased 70%. Through a five-year effort, created a carpet backing system that is made with 100 percent reclaimed content. This flooring product is the first that is recyclable back into itself in a closed-loop fashion. Has integrated life cycle considerations into technology development programs. For example, working with the U.S. Dept. of Agriculture to convert corn hulls, a low-value by product, into a health-promoting food source that does not require any incremental use of natural resources. Performed approximately 60 LCA studies in 1998 to support vehicle and component design. The most comprehensive studies focused on different fuels and vehicle concepts of the future.
Yes
BP Amoco Collins and Aikman
Yes
Yes
Monsanto
Yes
Volvo
Yes
14
LEADING AND LAGGING INDICATORS

All of the companies report the use of both leading and lagging indicators. Since leading indicators tend to be internally-focused, it is not surprising that the majority of externally-reported indicators were in the lagging (i.e., outcome-oriented) category. Some particularly effective examples of combining leading and lagging indicators are presented in Table 4. These examples are a good illustration of how business activities can be linked to sustainability results. For example, Volvos leading indicator is the number of R&D programs addressing material recycling, while related lagging indicators include the total quantity of material and number of parts recycled.
Table 4. Effective Use of Leading and Lagging Sustainability Indicators

Company The Body Shop BP Amoco Collins and Aikman Monsanto Volvo Business Activities Employee Satisfaction Risk assessment & management Water recycling program Audits Life Cycle Assessments Leading Indicators (Metrics) Survey (scores) Programs (scores) Status (qualitative) Program (scores) Programs (#) Sustainability Results Lower absenteeism Enhanced public opinion Decreased water use Improved compliance Increased recycling Lagging Indicators (Metrics) Rate (%) Survey (scores) Rate (gal/yd2 carpet) Fines ($ and #) Quantity (kg) Items (#)
In summary, each of the best practice companies is, to varying degrees, implementing each of sustainability measurement principles. Moreover, some of their measurement practices are particularly noteworthy. For companies beginning sustainability programs, these examples demonstrate how they can tackle the unique challenges of measuring and reporting sustainability performance.
SPM PROCESS IMPLEMENTATION

The next part of the analysis addressed how companies actually developed their performance measurement programs. Because this study was based on publicly available information, the specific path undertaken by each company was not evaluated. Rather, the analysis focused on whether or not the companies had completed each of the process steps shown in Figure 2 (page 5).
STEP 1: DEVELOP SUSTAINABILITY POLICY

As described earlier, the first step in the Plan phase is developing a policy that states the companies intent to improve triple bottom line performance. Each of the best practice companies has publicly declared a policy. However, the specificity and scope of the policies vary considerably. Obviously the interpretation of these policies could vary widely, and therefore the devil is in the details of how these policies are actually implemented. The policies of the five companies are listed below:
15
The Body Shop is dedicated to the pursuit of social and environmental change. It has a holistic mission statement, embracing human and civil rights, ecological sustainability and animal welfare. BP Amocos goals are simply stated- no accidents, no harm to people, and no damage to the environment. We will continue to drive down the environmental and health impact of our operations by reducing waste, emissions, and discharges, and using energy efficiently. We will produce quality products that can used safely by our customers. Collins and Aikman believes that business can and must play a leadership role in transitioning from exploitive to sustainable manufacturing systems so that people, business, and the environment can prosper. The conditions of our world- the stresses being placed on natural and social systems that sustain us- eventually will require all of us to solve the sustainable development puzzle. Monsanto is determined to be a leader among businesses in this effort. We committed to this course several years ago, and we think our scientific and technological skills can provide us special opportunities to have an impact. Environmental Care is a Volvo Core Value. Volvo is to be ranked as a leader in terms of Environmental Care among the worlds top producers of automotive and transport products, equipment, and systems. Volvos environmental programs shall be characterized by a holistic view, continuous improvement, technical development, and resource efficiency. Volvo shall, by these means, gain competitive advantage and contribute to a sustainable development.
STEP 2: IDENTIFY MAJOR ASPECTS

Before deciding which indicators to track, each company underwent a process of evaluating how its products, processes, and business activities could and did affect the environment. However, their process for determining which interactions were the most significant was not publicly disclosed. Several important findings emerged and are shown in Table 5,
q
Only two companies (BP Amoco and Collins &Aikman) track the revenues associated with their sustainability efforts. While all of the companies are reporting at least one dimension of economic performance, none are currently tackling the complex issue of measuring the externalities associated with their company. All of the companies are tracking a wide variety of environmental indicators, ranging from greenhouse gas emissions to solar energy production. All of the companies are attempting to measure employee satisfaction but generally have few other societal indicators. Two unique efforts are Collins & Aikmans tracking of the impacts that their products have on indoor air quality and Monsantos measurement of Medicinal Drug Access.
16
Table 5: Sustainability Aspects Examined2

Aspect Direct Hidden
Env. Costs, Stock Disposals
The Body Shop
BP Amoco
Solar Power Revenues Env. Costs Env. Disasters, Fines
Collins and Aikman

Green Product Revenue
Monsanto
Volvo
Environmental R&D
Economic
Env. Costs Fines and Superfund Sites
Contingent Relationship Externality Material

Water Recycling, LCA Energy, Fuel, Renewable Energy Effluent Discharges, Landfill, Spills Customer Satisfaction
Public Concern Water and Waste Recycling Energy, Non-fossil Fuels Water Recycling, LCA Energy, Fuel Water Recycling, LCA Energy, Fuel
Water Recycling Energy, Solar Energy. Clean Fuel Discharges, Oil Spills, Habitat Loss, Hazardous Waste Hydrocarbon Emissions, Injection Wells Greenhouse Gases, CO2 Employee
Energy Environmental
Local
Dyeing Wastes
Hazardous Waste, Spills
Hazardous Waste
Regional
Incineration
Air Emissions
Air Emissions, Injection Wells
NOx, SO2, Solvents CO2, CFC11, Greenhouse Gas Surveys
Global Quality of Life Societal Peace of Mind Illness Accident Health & Wellnes
2
CO2
CO2 Surveys, Retention, Promotion
CO2
Employee Customer Social Audit
Assessments, Teams
Indoor Air Quality Absences Absences Medicinal Drug Access
Many of these indicators could fit into two or more aspect categories. For example, air emissions could certainly influence stakeholder satisfaction and financial performance but is included in the environmental category.
17

While the lists of indicators summarized in Table 5 are fairly extensive, they are not complete. For example, the table does not show organizational indicators such as audit scores, management system certifications, and risk management programs. These process indicators are equally important and often lead to several dimensions of improved performance. One final point is that nearly all of the sustainability aspects reported by the companies had corresponding indicators and metrics for tracking performance (see Appendix for details). This seemingly obvious connection is often not made - many companies have identified important environmental and societal aspects, but have not developed the means to measure their performance relative to those aspects.
STEP 3: ESTABLISH OBJECTIVES

Each of the companies completed the third step of establishing improvement objectives. While all of the companies had one or more environmental objectives, some lacked societal and financial objectives. Examples from each company are listed in Table 6 and a complete list of objectives is provided in the Appendix. As with Step 2, a positive finding was that performance indicators supported each stated objective. Thus, the clich, What gets measured, gets managed, applies equally well to sustainability objectives. The improvement path for these companies includes stating what they intend to achieve and having a specific means for assessing their progress towards these goals.
Table 6. Triple Bottom Line Objectives

Company The Body Shop Financial Objective Environmental Objective To increase the proportion of recycled plastic accessories Societal Objective To follow social and ethical best practices To provide learning and development programs To reduce fatal accidents in operations
BP Amoco Collins and Aikman Monsanto To make the industrys first green competitive product To create value while reducing waste
To reduce greenhouse gas emissions To increase overall materials efficiency To improve soil quality
To enable better health, better nutrition, improved quality of life To involve all employees in environmental activities
Volvo
To track environmentally To take account of related investment and complete product lifeproduct development cycle costs
18
STEP 4: SELECT INDICATORS AND METRICS

Once a company understands its important aspects and has established sustainability objectives, the decision-makers can specify indicators and metrics for tracking performance. Of course, all of the companies reported indicators and metrics, but additionally each of them have a few metrics that are in some way distinct from the ones commonly used by industry. As shown in Table 7, these innovative metrics often are able to convey the companys implementation of its sustainability policy more effectively than conventional metrics. For example, a unique feature of Monsantos program is its approach to measuring the companys ability to conserve habitat. Most companies use annual contributions to conservation organizations as their indicator for wildlife habitat preservation. Instead of using this leading indicator, Monsanto quantifies the increase in yield from using their seeds. Based on the yield improvement, the company reports the amount of land that can be protected rather than used for farmland.
Table 7. Examples of Innovative Performance Metrics

Indicator Waste production Energy Wildlife habitat Conventional Metric Tons/year kWh per annum Amount of money donated to conservation organizations # of facilities with programs Scores on surveys Innovative Metric % compared to industry benchmark per unit of product (Collins and Aikman) Relative reduction and % reduction (Volvo) % increase in yield from seeds (reducing the need for more farmland) (Monsanto) % promoted from within company (Collins and Aikman) Scores on Ethical, Social, Customer, Employee, and Shareholder Audits (The Body Shop) Results of frequent employee surveys, with scores compared to external norms. (BP Amoco)
Education programs Stakeholder perception Employee satisfaction
Surveys
While using innovative indicators and metrics might be the preferred choice for company decisionmakers, many external stakeholders are advocating that companies standardize their sustainability performance reporting process. Unlike financial reports, sustainability results generally cannot be easily compared between companies or industries. As shown in Table 8, comparing the results of the best practice companies would be fairly difficult. Recently, Canadas National Round Table on the Environment and Economy piloted a program with eight companies3 who tested a set of standard indicators. The study concluded that some indicators, such as
3
3M Canada, Alcan Aluminum, Bell Canada, Monsanto, Noranda, Nortel Networks, Procter & Gamble, and Pacific Northern Gas (representing WestCoast Energy) participated in the study.
19

energy consumed per unit of output, are widely applicable. However, indicators for material intensity, such as materials consumed per unit of output, are more relevant in some industry sectors than others. Additionally, the amount of effort required to measure some of the standard indicators was sometimes considerably more extensive than previous reporting efforts (NTREE, 1999).
Table 8: Comparing Sustainability Performance

Indicator CO2 Emissions Metric #1 Company total Tons (Body Shop) Energy Consumption Relative reduction, % (Volvo, Collins and Aikman) Metric #2 Company total Billion pounds (Monsanto) Normalized use, kWh per 1,000 units (Body Shop) Metric #3 Total from BP and equity partners Million tonnes (BP Amoco) Total, million gigajoules (Monsanto) Metric #4 Normalized amount Lbs/yd2 of carpet (Collins & Aikman)
STEP 5: DETERMINE TARGETS

The final step in the performance measurement process is developing a set of targets that states the desired level of improvement. Sometimes, performance measurement programs falter because of a lack of clear targets. Targets enable external stakeholders to assess the companys progress, and provide clear guideposts for internal decision-makers. As shown in Table 9, the best practice companies have at least some specific targets but gaps exist. The data visualization methods of BP Amoco and Volvo are noteworthy because they clearly communicate the level of achievement.
Table 9. Sustainability Targets

Company The Body Shop BP Amoco Collins and Aikman Monsanto Set Targets? Some Some Some Few Comments The Body Shop has stated explicit targets for several of its indicators Progress towards selected targets is shown graphically Targets for energy usage, water usage, air emissions, and waste are published While Monsanto has set targets in the past, the company is changing its approach from company-wide targets to business sector specific targets because of significant differences between the sectors Ranks progress towards listed targets with a white dot (behind schedule), gray dot (on schedule) or black dot (achieved target)
Volvo
Most
20
REMAINING STEPS
Much of the specific information about how the companies implement and improve their performance measurement process is not publicly available; however, two points are observable and worth noting. The first point concerns how companies report their performance (implementation). Each of the best practice companies reports its current and historical levels of performance so that external and internal stakeholders clearly understand how much the company has improved (see Table 10).
Table 10. Use of Trend Data

Company The Body Shop BP Amoco Collins and Aikman Monsanto Volvo Trends Yes Yes Yes Yes Yes Comments Since 1991 Since 1993 Since 1993 For on-site, air, injection, POTW, and offsite releases and chemical spills, from 1995-1997 Some trends graphed since 1989, though most from 1995 to present
The second important point is relative to the companies continuous improvement efforts. To support this effort, three of the best practice companies externally report their performance relative to other organizations. As with the trend data, these benchmarks help stakeholders evaluate how the company is progressing (see Table 11).
Table 11. Sustainability Benchmarking Practices

Company The Body Shop BP Amoco Collins and Aikman Monsanto Volvo Benchmark? Yes Yes Yes No No Comments Reports energy efficiency relative to several benchmarks, including emissions per unit of GDP in the UK Provides benchmark data for Social and Safety Reporting Reports performance relative to other companies in their market sector If conducted, not publicly reported If conducted, not publicly reported
21
SUMMARY OF FINDINGS
Some important lessons can be learned from the companies that are already tackling the challenge of measuring and reporting their path towards sustainability. A review of publicly available data shows that The Body Shop, BP Amoco, Collins & Aikman Floorcovering, Monsanto, and Volvo are applying the four principles and following most of the measurement steps. For example, all of these companies:
q
q q
q q q
Measure and report the three dimensions of sustainability: economic, environmental, and societal. Report their efforts to conserve resources and create value. Consider the entire life cycle of their products and services, rather than concentrating exclusively on their core operations. Track both leading and lagging indicators. Have a clearly articulated sustainability policy. State how company activities can hinder or enable sustainability, and how the company intends to improve performance Measure and report innovative metrics that are relevant to their organizations program
While each of these companies measurement programs is commendable, some important differences exist.
q
As expected, the choice of measures of value generated by company activities varies widely; for example, Collins & Aikman measures air quality improvement due to VOC reduction, while Monsanto measures soil conservation due to improved agricultural practices. Only one company, The Body Shop, has applied an extensive stakeholder auditing process to measure societal performance and is attempting to quantify many societal indicators by scoring Stakeholder Perception. The specific indicators used by companies vary considerably and thus the measurement results are not directly comparable. Only two companies, BP Amoco and Collins & Aikman, publicly track the revenues associated with their sustainability efforts. One company, Monsanto, states few targets for company-wide future performance because of significant variations between the types of value created and wastes generated by the different business units. Three of the companies benchmark their progress relative to competing firms (se Table 11).
Finally, one of the dominant themes that emerges from these similarities and differences is the continued focus of sustainability measurement on the environmental dimension. This focus is a legacy of historical practices, and continues to occupy most of the attention of external stakeholders. As mentioned earlier, the practice of societal reporting is relatively new and being led by a few path breaking companies, including The Body Shop. With regard to economic performance measurement, financial reporting is well established but generally focused on business performance as defined by generally accepted accounting practices (GAAP) and driven by the finance organization. In contrast, environmental reporting among large corporations is usually the responsibility of the environmental, health and safety organization. An important step in moving toward triple bottom line integration will be the recognition that economic impacts need to be addressed through a life cycle accounting framework that extends beyond traditional financial boundaries.
22
THE STRATEGIC IMPORTANCE OF SUSTAINABILITY MEASUREMENT

The newfound awareness of sustainability within the business community signals an emerging synthesis between traditional business values and the concepts of environmental and social responsibility. However, for sustainability to become integrated into company strategies and operations, a systematic performance measurement process is essential. To support this transformation, this paper has presented a set of principles, a systematic process, and a number of best practice examples. This research has demonstrated that: 1. SPM is a rapidly evolving practice 2. SPM is valuable for demonstrating progress to both internal and external stakeholders 3. Leading companies are already addressing many of the challenges associated with measuring and reporting economic, environmental, and societal performance 4. More importantly, SPM helps company employees make decisions that reduce resource consumption while creating value across throughout their supply chain The sustainability performance measurement principles, process, and best practices outlined in this paper can help companies as they take on the complex task of moving from resource intensive operations to more eco-efficient, value-maximizing organizations. SPM practices will play an increasingly important role as environmental and societal considerations begin to permeate business activities. Already, companies in the automotive, chemical, energy, food production, packaging, and other industries are using this type of information to improve their decision-making efforts. For example,
q q
q q
Designers assess how the sustainability profiles of competing product concepts compare Marketers analyze how their product or service satisfy their customers by lowering the cost of ownership and creating tangible and less tangible benefits Production managers apply life cycle costing methods to quantify hidden environmental costs Strategic planners assess the consequences of environmentally driven scenarios.
The need for sustainability awareness is becoming an imperative, as global pressures intensify. The world population will soon surpass six billion, while concerns about climate, water, land, and habitat preservation continue to mount. Rapidly developing economies around the world are creating growing markets for goods and services. These conditions are creating opportunities for companies to fundamentally change how they engage suppliers, operate facilities, and service customers. In addition to new technologies, new production methods, and new management systems, these companies will need a new language to communicate their performance goals and progress. A well conceived sustainability performance measurement process will respond to that final, fundamental need.
23
BIBLIOGRAPHY
Baker, K. The Development of Organization and Program Performance Indicators. Pacific Northwest Laboratory. 1999. Bennett, Martin, and James, Peter. Sustainable Measures: Evaluation and Reporting of Environmental and Social Performance. Greenleaf, Sheffield, UK. 1999. The Body Shop web site. The Values Report, 1997. http://www.the-body-shop.com/aboutus/values.html, (June 23, 1999). BP Amoco web site, Environmental and Safety Report, 1998. http://www.bpamoco.com/reports/enviro/, (June 21, 1999). BP Amoco web site, Health, Safety, and Environmental Data, 1998. http://www.bpamoco.com/reports/enviro/, (June 22, 1999). Bridger, Mac. Carpet In/ Carpet Out: The Continuing Journey at Collins and Aikman. Industrial Ecology IV, The Future 500 Conference, April 29, 1999. Canadian Institute of Chartered Accountants. Reporting on Environmental Performance. CICA, Toronto. 1994. Collins and Aikman, Catalyst: Elements of Change, 1998. Collins and Aikman web site, Environmental Statement, 1999. http://www.collinsandaikman.com/environmental/index.html, (June 24, 1999). Collins and Aikman, Practical Vision Interiors and Sources Magazine, 1998. Dixon, Frank, Environmental Leaders Achieve Superior Stock Market Performance in the Electric Utility Sector, The Annual Public Utility Reporters Environmental Conference, New Orleans, LA. May 25, 1999. EPRI. Environmental Performance Measurement: Design, Implementation, and Review Guidance for the Utility Industry. TR-111354. 1998. EPRI. Environmental Performance Measurement: A Framework for the Utility Industry. TR-106078. 1996. Epstein, Mark J. Measuring Corporate Environmental Performance: Best Practices for Costing and Managing an Effective Environmental Strategy. Institute of Management Accountants, Foundation for Applied Research. Irwin, Chicago, IL. 1996. Fava, James, and Smith, Joyce. Integrating Financial and Environmental Information for Better Decision Making. Journal of Industrial Ecology. Winter 1998. Fiksel, Joseph; McDaniel, Jeff; and Spitzley, David. Measuring Product Sustainability. The Journal of Sustainable Product Design. 1998. Fiksel, Joseph. Metrics, Decisions, and Strategies: Environmental Performance Measurement in the Electric Utility Industry. Total Quality Environmental Management. 1995. Fiksel, Joseph. Practical Issues in Environmental Performance Evaluation, in Tibor, T. and I. Feldman, Implementing ISO 14001. 1997. Hart, Stuart J. Beyond Greening: Strategies for a Sustainable World. Harvard Business Review. January/February 1997.
24

Indicators Task Force. A Report on Canada's Progress Towards a National Set of Environmental Indicators. Environment Canada, Ottawa. 1991. James, Peter. The Sustainability Cycle: A New Tool for Product Development and Design. Journal for Sustainable Product Design. July 1997. Kiernan, Matthew, and Martin, James, Wake-Up Call for Fiduciaries: Eco-Efficiency Drives Shareholder Value, Todays Corporate Investor. December 1998. Metcalf, K.; Williams, P.; Minter, J.; and Hobson, C. Environmental Performance Indicators for Enhancing Environmental Management. Total Quality Environmental Management. Summer, 1996. Monsanto web site, Sustainable Development Report, 1997. http://www.monsanto.com/monsanto/about/sustainability/default.htm, (June 15, 1999). National Round Table on the Environment and the Economy. Measuring Eco-efficiency in Business: Feasibility of a Core Set of Indicators. Renouf Publishing, Ottawa, Ontario. 1999. OECD. Towards Sustainable Development - Environmental Indicators. OECD Code 971998031P1. July 1998. Ranganathan, Janet, and Ditz, Daryl. Measuring Up: Toward a Common Framework for Tracking Corporate Environmental Performance. WRI, Washington, DC. 1997. Sustainable Systems Associates Ltd. Applying Sustainable Development to Business: Realizing the Benefits. Queen's Printer for Ontario, Ontario, Canada. May, 1998. Volvo web site, Environmental Report, 1998. http://www.volvo.com/environment/index.htm, (June 17, 1999). Zadek, Simon; Pruzan, Peter; and Evans, Richard. Building Corporate AccountAbility: Emerging Practices in Social and Ethical Accounting, Auditing and Reporting. Earthscan, London. 1997.
25
APPENDIX SUMMARIES OF SPM PROGRAMS

THE BODY SHOP
Aspect
Air
Objective
Conserve natural resources and control air pollution
Indicator
CO2 emissions
Leading/ Lagging
Lagging
Metric
Compensation for CO2 emissions via tree planting Tons emitted % reduction
Target
Compensate for all CO2 emissions through tree planting or other initiatives by the year 2010 By 2000, reduce proportion of export freight going by air to no more than 2.5% of total export freight By the year 2000, all UK shops will reduce energy use to 35,000 kWh per annum
Air freight
Leading
Electricity consumption Energy Conserve energy resources Gas consumption
Lagging
% reduction kWh
Lagging
kWh Total use per 1,000 packs distributed from warehouse % increase in efficiency % increase Liters m 3 m per 1,000 unit packs distributed from warehouse m Monthly burden to sewer Ecological wastewater treatment systems will be established at UK and US sites by the year 2000 Investigate transfer of treated water to surface water instead of sewers in 1998.
3 3
Electricity generation by renewable sources Fuel use Water consumption
Lagging Lagging Lagging
Water
Conserve water and control pollution Improve utility modeling
Effluent treated
Lagging
Discharges to water Lagging
Number ecological waste water treatment systems established
A1
THE BODY SHOP (continued)

Aspect Objective
Dispose waste in the safest possible way Increase proportion of recycled plastic accessories Increase recovery of plastic Increase in-store refill Implement a system for monitoring waste produced on behalf of The Body Shop by third party manufacturers Follow social and ethical best practices Social responsibility Improve environmental rating of materials suppliers Continue dialogue with employees Create equal opportunities Provide learning and development programs
Indicator
EMAS certification Recycling Disposal to landfill Disposal incinerated Spills Social audit process Ethical audit Supplier environmental rating Customer satisfaction Employee satisfaction Shareholder satisfaction Absences Accidents
Leading/ Lagging
Leading Lagging Lagging Lagging Lagging Leading Leading Leading Lagging Leading Leading Lagging Lagging Leading Leading
Metric
# sites certified Tons of waste recycled (by material) Tons Tons Numbers Scores Scores Scores Scores Scores Scores Rate per 1,000 employees Rates per 1,000 employees Scores $ (not in place as of 1998) Number of assessments % decrease in raw materials purchased % of cost
Target
By August 1998, all principal UK operating sites will be audited and verified to EMAS standards. By 2000, all solid waste arising from waste water treatment at Watersmead will be utilized on-site through ecological treatment processes
Waste
Environmental Management Performance
Audits Conserving natural resources and controlling pollution To become a sustainable business Implement best practices in environmental management Environmental expenditure
By 1998, the Body Shop will investigate the implementation of a full cost accounting system
LCA
Leading
Stock disposals
Lagging
Annual stock disposals will be no more than 2% of the cost of exwarehouse sales by end of 1997
A2
BP AMOCO
Aspect Objective Indicator
On-site emissions Reduce greenhouse gas emissions Air Achieve year-on-year reduction of air emissions per unit of throughput Reduce hydrocarbon emissions CO2 emissions Hydrocarbon emissions Greenhouse gas emissions Energy consumption Solar energy production Fuel production Clean fuel program Achieve year-on-year reduction of water consumption and discharges per unit of throughput Water consumption Discharges to water Environmental disasters Land Habitat loss Environmental conservation programs Lagging
Leading/ Lagging
Lagging
Metric Tons/year Emissions per unit of

throughput % reduction Emissions per unit of throughput Tons/year, Emissions per unit of throughput Tons/year Emissions per unit of throughput Tons/year
Target
Establish baselines of emissions Create short and long term targets for improvement
Lagging
Lower annual hydrocarbon emissions 165,000 tons by 2001
Lagging Lagging Lagging Lagging Leading Lagging Lagging Lagging Lagging Leading
Energy Use
Megawatts % increase $ of solar energy revenue Million tons Cities
Increase solar turnover to 1 billion by 2007 Become an unleaded company in the next three years Take clean fuel program into more than 40 cities worldwide over the next two years
Water
Tons/year by process Number % reduction Number of programs Financial contributions for protecting habitat % reduction in habitat loss
A3
BP AMOCO (continued)
Aspect Objective Indicator
Hazardous waste Achieve year-on-year improvement by reducing sum of waste emissions per unit of throughput Recycling Releases to injection wells People management appraisals Social Responsibility Social investment Days away from work Employee satisfaction Peer reviews and self-assessments Audits Environmental Management Performance Risk assessment and management programs Environmental operating costs Public opinion surveys Fines Oil spills
Leading/ Lagging
Lagging Lagging
Metric
Target
Waste
Lagging
Leading
Scores Feedback # of projects Days per 200,000 hours % improvement Scores Feedback Scores # performed Scores Scores Become ISO 140001 certified at major sites and publish verified site improvement reports
Create trust and mutual advantage in all relationships Reduce fatal accidents in operations
leading Lagging Leading Leading Leading Leading
Drive down environmental and health impacts of operations
Lagging Lagging Lagging Lagging
$ millions Scores Number Cost Number Gallons spilled
A4
COLLINS AND AIKMAN FLOORCOVERINGS

Aspect Objective
Decrease total air emissions Decrease green house gas emissions Reduce problems associated with VOC emissions Lower energy consumption Energy Employ non-fossil fuel energy sources Water usage Water Decrease water consumption Water recycling program Solution dyed yarn usage Waste reduction Material utilization Increase overall materials efficiency Closed looprecycling Employee Surveys Retention rate Promotions from within Competitiveness of green products Lagging
Indicator
Total air emissions CO2 emissions
Leading/ Lagging
Lagging Lagging
Air
Total VOC emissions Energy usage
Lagging
Metric Lbs/yd2 of product % reduction Lbs/yd2 of product % reduction Comparison to industry average % reduction Mg/m2*hr Comparison to industry average
mBTU/yd of product % reduction
2
Target
Realize a 90% overall reduction in total air emissions during the years 1993 to 1999 Achieve a 37% overall reduction in CO2 emissions during the years 1993 to 1999
Lagging
Achieve a 37% overall decrease in normalized energy use during the years 1993 to 1999
Gal/yd of product % reduction Comparison to industry average
Realize a 45% overall reduction in normalized water use during the years 1993 to 1999
Leading Lagging Lagging Lagging
Percentage Lbs/yd of product % reduction Comparison to industry average Scores Comparison to top-ranked companies Comparison to industry average Percentage Revenues from green products
2
Achieve a 82% overall reduction in normalized waste generation during the years 1993 to 1999
Leading Lagging Lagging Lagging
Social Responsibility
Financial
Become a sustainable company
A5
MONSANTO
Aspect Air Objective Improve air quality Indicator On-site emissions CO2 emissions Energy consumption Fuel consumption Water consumption Soil conservation Hazardous waste Recycling Waste Create value /reduce waste Increasing efficiency throughout the lifecycle of products Releases to injection wells LCA Social responsibility assessment Medicinal drug access programs Lagging Leading/ Lagging Lagging Lagging Lagging Lagging Lagging Lagging Lagging Lagging Metric Target
Thousand pounds Billion pounds Million giga-joules % reduction Liters saved per hour Billion tons lost % reduction Waste to product Tons Thousand pounds Reduction in waste Reduction in disposal costs Reduction in footprint # of activities feasibility of activities # served Complete streamlined LCA evaluations for at least three major product uses in 1998
Energy
Reduce energy use Improve water quality Reduce water use Improve soil quality Make land as productive as possible; feeding people, protecting habitat
Water Land
Leading
Social responsibility
Enable better health, better nutrition, improved quality of life Support enhanced personal productivity
Leading
Lagging
A6
MONSANTO (continued)
Aspect
Objective
Indicator
Audits Sustainable development teams Information sharing networks
Leading/ Lagging
Leading Leading Leading
Metric Scores
Percent participation Success stories Number Amount ($) Total costs ($) number Number of sites % increase in crop yields
Target
Decrease product impact Minimize numbers of incidents
Fines Environmental expenditures Chemical spills Responsibility for superfund sites Technology programs
Lagging Lagging Lagging Lagging Lagging
A7
VOLVO
Aspect Objectives
Minimize the quantity of air emissions Reduce total atmospheric emissions attributable to transport operations Lower contribution to greenhouse effect of CO2 emissions from buses Minimize the energy consumed by our products Become a world leader in the development of low-emission gas turbines (smaller than 10 MW) Lower water consumption
Indicators
Total solvent emissions SO2 equivalents NOX emissions Greenhouse gas emissions CFC11 equivalents CO2 emissions during use phase Energy consumption
Leading/ Lagging
Metrics % reduction Emissions/net sales Tons

Tons % reduction Emissions/net sales Tons Tons Kg % reduction Emissions per tonkilometer per vehicle % reduction Consumption/ net sales Tons
Targets
In 1998, achieved target of a 25% solvent emissions reduction Over the next five years, atmospheric emissions attributable to the Groups transport operations will decrease by 5% per ton-kilometer In 1998, achieved 5% reduction of NOx emissions
Air
Compared with 1995, the contribution to the greenhouse effect of CO2 emissions from buses sold in 1999 shall be 11% lower in the case of city buses, and 4% lower in the case of intercity buses and tourist coaches In 1998, achieved target of a 10% reduction in energy consumption
Lagging
Energy
Fuel consumption
Lagging
% reduction
Fuel consumption of new cars sold in the EU in 2008 shall be 25% lower than in 1995 The average fuel consumption of engines complying with Euro2 standard shall be 5% lower in 1999 than in 1995. Water consumption shall be reduced by 30% over a five-year period. In 1998, achieved target of a 10% water consumption reduction
Water
Water consumption
Lagging
% reduction Consumption/net sales
A8
VOLVO (continued)
Aspect Objectives
Improve control of chemicals Minimize consumption of raw materials and production of waste and residual products Facilitate safe waste management Waste Address complete product life cycle, including energy and raw material consumption, and waste and byproducts generation Develop intelligent transport solutions with low environmental impact Social Responsibility
Indicators
Noise Hazardous waste Recycling
Leading/ Lagging
Lagging Lagging Lagging Leading
Metrics
dB(A) Tons Kg # of items recycled recycling research
Targets
Reduce the noise level of Volvo wheel loaders by 4-5 dB(A) from present levels by the year 2002
Create dismantling instructions that simplify the recycling of the Volvo 5000 and 7000 bus models in 1999 Reduce waste to landfill by 10%
LCA
Leading
# programs
In 1998, achieved target of integrating LCA in ten major product development projects
Employee Surveys
Leading
Scores Comparison to topranked companies
A9
VOLVO (continued)
Aspect Objectives
Taking a leading position regarding environmental standards, wherever we operate Ensuring a similar degree of environmental concern is exercised by our working partners
Indicators
Audits European environmental certifications
Leading/ Lagging
Leading
Metrics
Scores Number of audits Number of products and plants with certifications
Targets
Complete environmental audits in all majority-owned production plants By 2001, marine and industrial equipment will be in accordance with EU standards Parts of truck product range shall comply with Euro3 Establish and implement global communication program in 1999 Enhance the skills of its personnel within its corporate structure in Sweden no later than 1999 Develop new services for electronic information processing and a globally integrated infrastructure in 1999 Establish environmental management systems in 40 of the Groups units Ensure that 75% of all Volvo employees are satisfied with the companys environmental management program.
Leading
Involve all employees
Env. training programs
Leading
# employees who have completed program
Formulate, communicate and monitor clearly-defined goals
Environmental management programs
Leading
# of plants and units that have implemented programs Environmentrelated investment as % of total investment Environmentrelated R&D costs as % of total R&D costs
Track variation of environmentrelated investment and product development costs Env. Related investment Lagging
Env. Related R&D lagging
A10

Sustainability Measurement GIN

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Sustainability Measurement GIN

Загружено:

Авторское право:

Доступные форматы

1999 Greening of Industry Network Conference Best Practice Proceedings

MEASURING PROGRESS TOWARDS SUSTAINABILITY PRINCIPLES, PROCESS, AND BEST PRACTICES

Joseph Fiksel Jeff McDaniel Catherine Mendenhall

1999 Greening of Industry Network Conference Best Practice Proceedings

1999 Greening of Industry Network Conference Best Practice Proceedings

SUSTAINABILITY MEASUREMENT PRINCIPLES

RESOURCE AND VALUE

Figure 1. Resource Consumption versus Value Creation

1999 Greening of Industry Network Conference Best Practice Proceedings

TRIPLE BOTTOM LINE

LIFE CYCLE CONSIDERATION

LEADING AND LAGGING INDICATORS

1999 Greening of Industry Network Conference Best Practice Proceedings

SUSTAINABILITY PERFORMANCE MEASUREMENT (SPM) PROCESS

SPM PROCESS OVERVIEW

11. Review Planning Steps

1. Develop Sustainability Policy

2. Identify Major Aspects

4. Select Indicators & Metrics

Figure 2. Sustainability Performance Measurement Process

1999 Greening of Industry Network Conference Best Practice Proceedings

1999 Greening of Industry Network Conference Best Practice Proceedings

STEP 1: DEVELOP SUSTAINABILITY POLICY

STEP 2: IDENTIFY MAJOR ASPECTS

1999 Greening of Industry Network Conference Best Practice Proceedings

Table 1. Aspects of Product Sustainability

STEP 3: ESTABLISH OBJECTIVES

1999 Greening of Industry Network Conference Best Practice Proceedings

STEP 4: SELECT INDICATORS AND METRICS

Business process indicators Needed to motivate behavioral changes

Sustainability outcome indicators Needed to provide evidence of results

Figure 3. Leading and Lagging Sustainability Indicators

1999 Greening of Industry Network Conference Best Practice Proceedings

1999 Greening of Industry Network Conference Best Practice Proceedings

STEP 5: DETERMINE TARGETS

BEST PRACTICE COMPANIES

1999 Greening of Industry Network Conference Best Practice Proceedings

APPLYING THE PRINCIPLES

RESOURCE AND VALUE

1999 Greening of Industry Network Conference Best Practice Proceedings

Table 2: Noteworthy Approaches to Measuring Resource and Value

THE TRIPLE BOTTOM LINE

0% The Body Shop BP Amoco Collins and Aikman Monsanto Volvo

Figure 4. Use of Financial, Environmental, and Societal Indicators

1999 Greening of Industry Network Conference Best Practice Proceedings

LIFE CYCLE CONSIDERATION

Table 3. Approaches to Life Cycle Consideration

BP Amoco Collins and Aikman

1999 Greening of Industry Network Conference Best Practice Proceedings

LEADING AND LAGGING INDICATORS

Table 4. Effective Use of Leading and Lagging Sustainability Indicators

SPM PROCESS IMPLEMENTATION

STEP 1: DEVELOP SUSTAINABILITY POLICY

1999 Greening of Industry Network Conference Best Practice Proceedings

STEP 2: IDENTIFY MAJOR ASPECTS

1999 Greening of Industry Network Conference Best Practice Proceedings

Table 5: Sustainability Aspects Examined2

The Body Shop

Collins and Aikman

Env. Costs Fines and Superfund Sites

Contingent Relationship Externality Material

Hazardous Waste, Spills

Air Emissions, Injection Wells